Let's set the record straight on risk pools

This is a response to a recent opinion piece by Sen. Deborah Reynolds regarding risk pools. Her comments deserve correcting so taxpayers have a more complete understanding of pooled risk programs.

New Hampshire's risk pools were authorized by the Legislature in 1987 under RSA 5-B. That law created a structure by which municipalities, and later counties and school districts, could pool their self-insurance funds and consolidate their administration to spread (and thus lessen) risk and lower administrative costs of their self-insurance programs.

Consistent with the concept of self-insurance, 5-B entities are not independent, commercial enterprises. Instead, they are governed by, and provide services only to, their local government members — municipalities, school districts and counties. In fact, Local Government Center's (LGC) 31-person board of directors consists entirely of local government representatives and employees who are directly accountable to the selectmen, city and town councils, school boards and taxpayers who appoint or elect them. Because of this self-governance model, and to maintain the affordability of pooled risk management programs, the Legislature did not require regulation of 5-B entities.

The Senate version of HB 1393 — co-sponsored by Sen. Reynolds — would allow the Secretary of State to establish reserve levels for risk pools. This approach is flawed for many reasons, the most important being that it prevents the directors of any pooled risk program — and there are three in New Hampshire — from making informed business decisions consistent with their fiduciary responsibilities. Elements such as plan and benefit design, the effects of national health care reform, reinsurance, potential investment returns, competition, long-term planning and many others play a part in the rate- and reserve-setting process. The last-minute amendment to HB 1393 takes these essential business decisions away from local officials who created the pools and hands them to a state agency with no expertise in pooled risk programs.

We do not fully understand Sen. Reynolds's motivations. Even as she is co-sponsoring the HB1393 amendment, she has co-sponsored another bill (SB 408) that would allow purchasing alliances to be formed to buy health insurance. Yet, the regulatory oversight for these pooled entities would be under the Department of Insurance, not the Secretary of State. Similarly, Multiple Employer Welfare Arrangements — a vehicle for providing health benefits to employers for their employees — are also regulated by the DOI.

We disagree with Sen. Reynolds' characterization of the expanded legislative authority granted to the SOS in 2009. In 2009, on the last day for committees to act, a non-germane amendment was added to HB 118. That amendment, which gave the SOS limited investigatory authority only, had no public hearing in the House or Senate. The House conferees expressed concern about giving the SOS any investigative authority at all, but ultimately agreed to the Senate amendment with a sunset of June 30, 2011, for the express purpose of allowing time to study whether risk pools should be regulated at all, and if so, "whether this authority might not be placed with the Insurance Department."

Let us also set the record straight on two other subjects raised in Senator Reynolds's opinion piece. First, she indicated that LGC does not pay unemployment taxes. In fact, it does. Second, she wrote that LGC spent $1.6 million for a parking lot in 2006. In fact, it did not. The property she referred to is the site of Goodale's Bike Shop. LGC did buy land behind its own building, at market value, for a badly needed building expansion.

Mark J. Halloran is superintendent of SAU 48 and chair of the LGC board of directors. Jessie W. Levine is town administrator of New London and vice chair of the LGC board of directors.

Editor's note: This piece was written prior to legislative action concerning oversight of LGC and we run it to offer a response to the aforementioned op-ed piece by Senator Reynolds.

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